US Consumer Sentiment Falls Sharply

The University of Michigan’s Consumer Sentiment Index fell sharply to 53.3 in March 2026, down from the preliminary estimate of 55.5 and below February’s 56.6. This places sentiment near record lows observed at the end of 2025, with declines spanning all age groups and political affiliations. Households with middle and higher incomes, as well as those with stock wealth, experienced the steepest drops in confidence. The downturn reflects the impact of rising gas prices and financial market volatility, both exacerbated by the ongoing Iran conflict. The short-term economic outlook plunged 14%, while expectations for personal finances over the next year dropped 10%. However, long-term expectations saw only modest declines, hinting that consumers may not anticipate the current challenges to persist indefinitely. Year-ahead inflation expectations rose to 3.8%, the largest monthly increase since April 2025, while long-term expectations edged down to 3.2%.

The University of Michigan Consumer Sentiment Index fell to 55.5 in March 2026, down from 56.6 in February but slightly above market expectations of 55, according to preliminary data. The reading marked the lowest level in three months, as households reacted to the military conflict involving the US and Iran. Higher gasoline prices had the most immediate effect on consumers, although the broader pass-through to other prices remains uncertain. A wide range of respondents across income groups, age brackets, and political affiliations reported weaker expectations for their personal finances, which fell 7.5% nationwide. Year-ahead inflation expectations held at 3.4%, ending six months of declines, while long-term expectations edged down to 3.2% from 3.3%. The survey was conducted between February 17 and March 9, with survey director Joanne Hsu noting sentiment weakened and inflation expectations rose following the start of the US military conflict with Iran on February 28.

The University of Michigan Consumer Sentiment Index was revised down to 56.6 in February 2026 from a preliminary 57.3, little changed from January’s 56.4. Still, it marked the highest reading since August 2025, following historically weak levels in recent months. All major components showed minimal movement, suggesting consumers see little change in economic conditions from the prior month. About 46% of respondents cited high prices as a strain on personal finances, with that share remaining above 40% for seven consecutive months. Perceptions varied notably across groups: sentiment improved among large stockholders but declined among households without equities. Similarly, higher-income and college-educated consumers reported gains, while lower-income and less-educated respondents did not. On inflation, one-year expectations dropped sharply to 3.4% from 4.0%, the lowest since January 2025, while longer-term expectations were unchanged at 3.3%.